While still in early stages, it was reported that the plan contains provisions by European lenders to lower interest rates on Greece's bailout loans and a broad-based bond buyback. The euro traded slightly lower ahead of that meeting.

After Friday’s weak US jobs data, another piece of important news came over the weekend when it was announced that Chinese inflation is 6.4 percent, raising the prospect of Beijing putting in place further measures to tame rising prices and slow down growth.

With a raft of data from both the US and Europe due later this week, the focus of the market will be on President Obama’s attempt to get a deal on the debt ceiling and Italy, which some fund managers believe is now back in the sights of the bond vigilantes.

Following big losses for Italian banks like Unicredit last week the Italian market regulator on Sunday imposed new rules on disclosing short positions in an effort to curb stock volatility.

After comments from Silvio Berlusconi late last week indicating he has fallen out with Italian finance minister Giulio Tremonti, the Italian government spent the weekend attempting to show investors the government is united.

Away from the debt crisis, BSkyB will dominate the press in the UK following a call from the leader of the main opposition party for Rupert Murdoch to drop his bid to take full control of the satellite broadcaster, as the investigation into phone tapping at the now shut News of the World continues.